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CAIRO—Egyptian President-elect Mohammed Morsi on Monday moved into the palace of the man who once jailed him.

His swift move into deposed leader Hosni Mubarak’s office was a potent symbol as Morsi begins forming a cabinet and working to calm a politically divided and economically frayed nation.

He also met with advisers to discuss strategies for strengthening his hand against Egypt’s military leaders, who remain suspicious of his Islamist leanings.

Once a political prisoner, the Muslim Brotherhood candidate’s election victory and subsequent police escort to the Orouba palace were stunning moments in Egypt.

Morsi, Egypt’s first freely elected president, faces pivotal tests in the days ahead. To unite the country, he must choose a cabinet that mirrors Egypt’s political diversity; move swiftly on an economic plan to overcome years of poverty and corruption; and nudge the army to restore presidential powers it curtailed this month.

A key aim — one that will define presidential authority for years to come — is to influence the drafting of a new constitution. The military, seeking to preserve its authority, is overseeing work on the document. Morsi says he wants a constitution that respects civil rights yet is enshrined in sharia law, a prospect the generals regard as a threat to their power with the potential to upend long-standing domestic and international policies.

To succeed, Morsi must convince Egyptians that Mubarak’s autocratic government is not simply being replaced with an institution — the Brotherhood — that will base its policies on narrow religious interests. In his victory speech Sunday night, he stressed pluralism, but his sharper challenge is to balance the voices of moderate and ultraconservative Islamists against those of leftists, nationalists, women, Christians and other non-Muslims.

“Morsi has no other choice but to reach out to all political forces. Not only to fulfil his pledges by forming a coalition government, but also to strengthen his legitimacy in the face of (the military),” said Khalil al-Anani, an expert on Islamist movements at Durham University in England. “I believe he will appoint a woman in a high position to avoid any criticism about his ideological stance.”

Morsi has said his deputies may include a woman and a Christian, and Mohamed ElBaradei, the former head of the UN’s nuclear agency, was being floated as a possible prime ministerial candidate, the Washington Post reported.

More a tactician than a visionary, Morsi has signalled in speeches that he understands his political fortunes rest on his ability to temper his conservative religious instincts, fix the economy and bring stability to the nation after 16 months of unrest.

The question is whether the military will grant him the power to govern or set him up to fail. That may be partly answered by the fate of parliament. The nation’s highest court dissolved the Islamist-dominated body this month, depriving Morsi of a legislative ally and denying Islamists control of two branches of government. The military has said elections will be held for a new legislature.

Morsi resigned from the Brotherhood hours after he was declared president-elect on Sunday. It was a pragmatic step that revealed the Brotherhood’s new reality as it — through Morsi — moves from the country’s leading opposition force into the presidential palace.

The Brotherhood has also muffled talk about limiting women’s liberties, such as rescinding a law that allows wives to divorce their husbands.

“The (Brotherhood) is too pragmatic to risk anything now. Even if they wanted to change some of the women’s rights laws, they would wait,” said Ashraf el-Sherif, a political scientist at The American University in Cairo. “They want to appease the military and the international community. It is clear that the new president is on probation in the eyes of the army.”

Questions were also raised about Morsi’s position on Iran Monday after an Iranian news agency said he had voiced interest in restoring ties with Tehran to create a strategic “balance” in the region. His aide denied the interview took place.

Iran’s Fars agency said it spoke to Morsi a few hours before Sunday’s election results were announced and quoted him saying the two countries should get closer politically and economically — comments that run counter to Western efforts to isolate Tehran over its nuclear program.

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